Plain sailing for Perdana Petroleum

by **Cals** Thu 21 Nov 2013, 17:59

Business & Markets 2013

Written by CIMB Research

Thursday, 21 November 2013 10:12

Perdana Petroleum Bhd
(Nov 20, RM1.99)
Maintain outperform at RM2 with a revised target price of RM2.88 (from RM2.78): The old baggage is gone as Perdana sailed through its sixth straight profitable quarter.

Our target price rises as we raise our 2013 financial year (FY13) to FY15 earnings per share (EPS) to reflect the higher utilisation rates. We continue to value the stock at a 2015 calendar year price-earnings ratio (PER) of 15.6 times, applying a 30% discount to the average PER of oil and gas big caps. Perdana remains an “outperform”, with the stronger FY13 earnings uptick as a potential rerating catalyst.

Perdana posted a net profit for its third quarter ended Sept 30 (3QFY13), its sixth consecutive profitable quarter.

The solid net profit for the nine-month period (9MFY13) met 75% of consensus’ FY13 estimate and 78% of our FY13 forecast on a stronger utilisation rate. 3QFY13 net profit expanded by 2% year-on-year (y-o-y) while 9MFY13 net profit jumped 12% y-o-y.

The earnings improvement came mainly from a rise in the utilisation rate, from an estimated 74% in 3QFY12 to a robust 83% in 3QFY13, beating our expectation of 75% to 80%. Meanwhile, the average charter rate improved from US$1.50 (RM4.78) to US$1.80 per horse power (HP) in 3QFY12 to around US$2.00 per HP in 3QFY13.

We are thrilled by the improvement in Perdana’s utilisation and charter rates, which support the company’s strong earnings recovery in FY13 after the net losses booked in FY10 to FY12 following a boardroom squabble and the excess supply of vessels in the market.

Perdana currently has a young fleet of 18 vessels with an average age of four years. Fifteen of these vessels are in operation, while the other three are under construction. Around 65% of the working vessels are on long-term charters.

Perdana has mobilised four vessels for a contract with Dayang Enterprise Holdings Bhd. Another two vessels will be put to work in the first half of 2014. To recap, Perdana clinched a 5+1 RM705 million contract, effective July 2013, from Dayang for the provision of five work barges and a work boat. — CIMB Research, Nov 19